This is a shockingly bad idea that has already failed in many places. The second part of the article linked in the OP is very sensible.
Where this has been tried, very very few people have tested positive for drugs. In the absence of any evidence of a problem, this is simply a way to further stigmatise and dehumanise benefit recipients. It's also a massive waste of taxpayers' money.
I understand the Australian system is not designed to deprive people of their benefits, unlike the systems in some US states, but to manage claimants' money for them via a card and, for a second positive test, to refer them for treatment.
I imagine there'll be a black market in cards, or people will buy meat to sell on or whatever. People with addiction issues are astonishing lateral thinkers. Or they'll commit more crime or just be poorer, more prone to homelessness, more malnourished, more unwell, less able to look after their DC etc.
Compulsory treatment is also a massive waste of time and money. It just doesn't work. And why are we starting with compulsory treatment? How about providing enough good quality voluntary treatment first and seeing where that gets us?
I didn't know welfare cards were being rolled out more generally in Australia. Is the money on them AU$ or some sort of 'points' or pseudocurrency? Are there any further restrictions beyond food? Could you spend it all on cake and fizzy pop or would it be rejected? Is there any monitoring of claimants' spending?
Sorry for all the questions, I just remember the glee from certain quarters when Lord Freud (architect of universal credit and proponent of scrapping the min wage for disabled people) suggested a blockchain system for benefit cards so the DWP could provide robust budgeting advice block purchases based on high quality real-time data on claimants' spending habits.
The one to watch in the UK WRT addiction or substance misuse issues is the new Work And Health Programme. I'm still reading up on this but from a quick skim it covers drug and alcohol issues (among many other things) and gives Work Coaches the power to decide appropriate treatment as part of a Work Programme.